The direct write-off method
A)recognizes losses from uncollectible accounts in the period when a firm decides that specific customers' accounts are uncollectible.
B)does not usually recognize the loss from uncollectible accounts in the period in which the sale occurs and the firm recognizes revenue.
C)provides firms with an opportunity to manage earnings each period by deciding when particular customers' accounts become uncollectible.
D)all of the above.
E)none of the above.

Question

Quizplus · Accepted Answer

The direct write-off method involves recognizing losses from uncollectible accounts when specific customers' accounts are deemed uncollectible, which does not align with the revenue recognition principle (A and B). It also allows for potential earnings management, as firms can decide the timing of recognizing these losses (C). Therefore, all statements A, B, and C are correct descriptions of the direct write-off method.

The Direct Write-Off Method